Laws & Jurisprudence
LIABILITY OF CO-MAKER
11:03 AM
Your friend might have asked you to sign as co-maker in a
promissory note or debt instrument without thinking on what will be your
liability then. The problem arises when the principal debtor or your friend was
not able to pay the obligation and the lender or obligee runs after you. You might
have responded to the lender that you have not received even a single centavo of
the loaned amount. This might enlighten you.
A co-maker
is a person who signed with a borrower in order to provide additional
protection when a lender or obligee extends a loan to an individual or entity.
The Liability of a co-maker in a
loan obtained by the principal borrower is similar to the latter even if the
former did not receive a portion thereof. You are bound equally, absolutely and
solidarily with the principal, and is deemed as an original promisor and debtor
also. Solidary means that the lender, the obligee, can go after you for the
whole performance or payment of the obligation even if the lender did not
attempt to collect from the principal. Therefore, the co-maker can be charged
and held liable as if a principal obligor. Thus, in case of breach or
non-payment of the loan obligation, the lender or creditor has the following options, to wit:
- Proceed against the principal debtor;
- Go directly against the co-maker/s even without trying to collect from the principal debtor; and
- Collect simultaneously the loan obligation from both the principal and the co-maker provided that the sum collected should not exceed the loan obtained.
However, the co-maker may go against the principal debtor for
reimbursement but this is not an excuse against the lender or obligee.
The author takes no responsibility for the validity, correctness and result of this work. The information provided is not a legal advice and it should not be used as a substitute for a competent legal advice from a licensed lawyer. See the disclaimer
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